Women and average income earners hit hardest by proposed student loan repayments

University of Melbourne Newsroom     |      4 September 2014

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Under proposed changes to Australia’s higher education sector University graduates, especially women, can expect a substantial increase in the time taken to pay off their student loans, an analysis by the Melbourne Institute at the University of Melbourne has found.

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The report, Impact of the Australian Higher Education Funding Reforms, found that repayment periods will often double for people earning a median income 10 years after graduation – this is around $83,000 for males and about $60,000 for females.

For women on median female graduate incomes, the time taken to repay student debt will increase from 12 to 26 years.

Lead researcher, Associate Professor Chris Ryan said that, graduates, in particular female graduates, would see the time it takes them to pay off their loans and their total loan repayments soar under the Governments proposed funding model.

“If a large proportion of women cannot repay their loans over their working lives, the entire loan scheme may be put in jeopardy in the future,” he said.

For male graduates on median incomes the proposed changes by the Government will add seven years onto the existing eight years it currently takes to pay off student loans.

The analysis also found that changes under the proposed funding model would lead to a three-fold increase in total loan repayments for some graduates.

People earning $55,000 10 years after graduation would pay an additional $80,000 in repaying the loans, if tuition charges double.

“The major jump in time to repay student debts may deter some possible applicants from undertaking higher education,” said Associate Professor Ryan.

“The impact of the changes will be much greater for those on incomes just above the first debt repayment threshold – which is around $50,000 – than those on either higher or lower incomes”

The report also found loan default will increase with a rise in the number of graduates making partial payments only. Around 40 percent of female graduates may not repay their loans over their entire working careers.